Amazon, while sophisticated in capabilities, is also a minefield for brands, given the high proliferation of independent upstarts that have eroded share away from the legacy brands.
In the ready-to-eat cereal category, indie brands account for 25% share of Amazon’s Cereal Best Sellers in July 2019—up from 23.7% last year according to Gartner L2’s Digital IQ Index: Food US. In November 2018, The Kellogg Co. entered the battlefield head-on with Hi! Happy Inside, a digitally native brand launched with popup stores and paid partnerships for promoting on social media platforms, without a television campaign. Unlike other brands in the portfolio, Hi! Happy Inside is the only brand incubated internally that does not feature Kellogg’s branding on the pack. Positioning as a probiotic cereal and speaking to digestive health and wellness trends has helped the brand launch with a premium price compared to the rest of the portfolio—resulting in better unit economics for e-commerce as well. Hi! Happy Inside already rose to an average rank of 57 for Amazon’s Best Sellers for RTE Cereal – Granola in July 2019.
Through acquisition and new product innovation, enterprises are fighting back against indie brands with their own indie-like brands. Showing agility in incubating brands in response to consumer trends and launching with digital savviness and support are critical moves for success in this competitive landscape.